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J & B, Inc. has $5 million of debt outstanding with a coupon rate of 12 percent. Currently the yield to maturity on these bonds
J & B, Inc. has $5 million of debt outstanding with a coupon rate of 12 percent. Currently the yield to maturity on these bonds is 14 percent. If the firm's tax rate is 40 percent, what is cost of debt to J & B?
1. | 14.0 percent | |
2. | 8.4 percent | |
3. | 12.0 percent | |
4. | 7.2 percent |
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